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Trusts and Estates
Rutgers University, Newark School of Law
Knee, Peggy Sheahan

Knee_Trusts_&_Estates.doc

Intestate Succession; Intestacy

Passage of property when the decedent dies without a valid will.

Descent

Succession to real property.

Distribution

Succession to personal property.

Intestate

Dying without a will.

Partially intestate

Decedent’s will does not dispose of all of the decedent’s property

Heir

A person entitled to take under intestate succession laws.

Ancestor

A person related to the descendant in an ascending lineal line, e.g., mother, grandmother.

Descendant

A person related to the decedent in a descending line, e.g., children, grandchildren.

Collateral relative

A person related to the decedent but not in a lineal line, e.g., sisters, nieces, aunts, and cousins. If the collateral relative is a descendant of the decedent’s parents, the relative is a first line collateral (siblings nieces, and nephews. If the collateral relative is a descendant of the decedents grandparents other than the decedent’s parents and their descendants, the relative is a second line collateral (aunts, uncles, cousins).

Consanguineous relationship

A biological or blood relationship.

Affinity relationship

A relationship by marriage, e.g., relative people usually refer to as their “in-laws.”

BASIC TERMINOLOGY – Wills

Testate succession

The passage of property under the decedents will.

Will

A written document or oral declaration directing who will own the decedent’s property upon the decedent’s death.

Codicil

A type of will that merely amends an already existing will.

Testator; Testatrix

A person who dies with a valid will. (male/female)

Devise

A gift of real property in a will. The person who receives the devise is the devisee.

Bequest

A gift of personal property in a will.

Legacy

A gift of money in a will. The person who receives the legacy is the legatee. A legacy is a type of bequest.

Beneficiary

Generic term for a person who receives property under a will, regardless of whether it is real or personal property.

BASIC TERMINOLOGY – Trusts

Trust

A property conveyance whereby the owner divides title to the property into legal and equitable interests and imposes fiduciary duties on the holder of the legal title to deal with the property for the benefit of the holder of the equitable title.

Settlor

The person who creates a trust by making the property transfer which divides title and imposes duties. The settler may also be called the trustor, the grantor, or the donor.

Beneficiary

The person who receives the equitable title to trust property and hence the right to benefit from that property according to the settlor’s instructions. The beneficiary may also be called the cestui que trust, the donee, or the grantee

Trustee

The person who holds the legal title to trust property and has the fiduciary duty to manage that property according to the settlor’s instructions and applicable trust law.

Principal

The property conveyed in trust form. The principal is also referred to as the trust corpus, estate, or res.

Income

The profits or other earnings made by property after it is conveyed in trust form (the interest on a certificate of deposit or the rent collected from real property).

BASIC TERMINOLOGY – General

Administration

The process of collecting and managing all a decedents property so that the decedent’s creditors are paid to the fullest extent allowed by law and the remaining property, if any, is turned over to the heirs and beneficiaries.

Administrator

The person in charge of administering the estate of an intestate decedent.

Executor

The person in charge of administering the estate of a testate decedent.

Personal representative

Generic term for the person in charge of administering the estate of a decedent.

Probate

In a broad sense, probate refers to the entire process of administering the decedent’s estate. In a narrow sense, probate means to prove a document or oral declaration to be the decedent’s valid will.

CHAPTER 1- INTRODUCTION TO FAMILY PROPERTY LAW

Part A. The Family Property Lawyer

Part B. Shifting Demographics and Sources of Wealth

Part E. Probate/Non-Probate Administration

Questions on page 1-20

Of the following assets, which would be subject to probate administration at G’s death, assuming that G dies first, survived by A?

Car – title in G: Probate
Bank Accounts: (a) checking, joint title in G & A: Non-probate; (b) Savings account, title in G: Probate
LMN Mutual fund: Title in G and A as equal tenants in common: G’s share will be probated
Certificate of Deposit: G & A as owners as with right of survivorship: Non-probate
Series EE US Savings bonds: Title in G, payable on death to A: Non-probate
Home: Title in G and A as joint tenants with the right of survivorship: Non-probate
Group term life insurance on life of G with A as the beneficiary: Non-probate
Qualified pension plan provided to G by G’s employer with A named as the beneficiary in case of death before retirement: Non-probate

Which of the assets would be subject to probate administration at G’s death if A died first?

Car – title in G: Probate
Bank Accounts: (a) checking, joint title in G & A: Probate; (b) Savings account, title in G: Probate
LMN Mutual fund: Title in G and A as equal tenants in common: G’s share will be probated
Certificate of Deposit: G & A as owners as with right of survivorship: Probate
Series EE US Savings bonds: Title in G, payable on death to A: Probate
Home: Title in G and A as joint tenants with the right of survivorship: Probate
Group term life insurance on life of G with A as the beneficiary: Non-probate
Qualified pension plan provided to G by G’s employer with A named as the beneficiary in case of death before retirement: Non-probate

CHAPTER 2 – INTESTATE SUCCESSION UPC §2-104

Policy basis of intestate succession laws

1) provide a distribution of real and personal property that approximates what decedents would have done if they had made a will; (2) serves society’s interest such as (a) protect the financially dependent family; (b) to avoid complicating property titles; (c) promote and encourage the nuclear family; and (d) encourage the accumulation of property by individuals; and (3) to produce a pattern of distribution that the recipient’s believe is fair and thus does not produce disharmony within the surviving family members or disdain for the legal system.

When Intestate Distribution Rules Apply – Intestacy statutes govern distribution of a person’s property when the person dies without a valid will, the will is denied probate, or the will does not completely dispose of the estate, resulting in partial intestacy.

What law governs – generally the law of the state where the decedent was domiciled at death determines the disposition of personal property; disposition of real property is determined by the law of the state where the property is located.

Probate subject to intestate distribution – intestacy statutes (or a will) apply only to a decedent’s probate (or testamentary ) estate. An asset of a decedent that passes either under intestate succession or through a will. Nonprobate assets (will substitutes) – assets of a decedent that passes via a manner other than intestate succession or through a will. Allows the donor to retain lifetime enjoyment and control over the asset, while purporting to transfer to another person a property interest in (or a contract right to ) future possession of that asset. Examples are life insurance, pension accounts, joint accounts, and revocable trusts. Joint tenancies also count as will substitutes because they provide for a right of survivorship. Will substitutes function to pass property at death without being subject to the statutorily formalities required for executing a will. Although the affected property passes at death, it avoids probate

Requirement of survival – Only persons who survive the decedent are entitled to succeed to the decedent’s property by testate or intestate succession. Unless altered by statute, survival by only an instant is sufficient.

Simultaneous Death
Uniform Simultaneous Death Act USDA Sec. 1 – All jurisdictions except Louisiana have adopted the USDA or the equivalent 120 hour survival rule of the UPC. The USDA provides that when there is no sufficient evidence that the parties have died otherwise than simultaneously, the property of each person is disposed of as if he had survived the other person.
a. Application of USDA – in cases of simultaneous death, intestate estates, testamentary assets under a will, and life insurance proceeds pass as though the owner survived the heir. In cases involving joint tenancies, tenancies by the entireties, or community property, one-half of the property passes as though one party survived and the other half passes as though the other party survived.
b. Evidence of survival – if there is sufficient evidence that one party survived the other, even for a brief interval, the USDA does not apply. Nor does it apply if the decedent’s will (or other instrument) has a contrary survival provision.
UPC § 2-104 – Any individual who fails to survive the decedent by 120 hours is deemed to have predeceased the decedent – the survival of 120 hours must be established “by clear and convincing evidence.”

Definition of death – Uniform Determination of Death Act (1980) – An individual who has sustained either (1) irreversible cessation of circulatory and respiratory functions, or (2) irreversible cessation of all functions of the entire brain, including the brain stem, is dead. A determination of death must be made in accordance with acceptable medical standards.

Relatives in Gestation at the decedent’s death UPC § 2-108 – For purposes of intestacy and for purposes of devises of any present interest in property, persons who are born after the decedent’s death generally are not eligible to receive the decedent’s property. Children in gestation (9 months prior to the date of birth) at the decedent’s death are treated as if they were alive at the decedent’s death if they subsequently are born alive.

Part B. General Patterns of Intestate Succession

Spouse UPC § 2-102

FORMER UPC § 2-102 (1969)
– Decedent’s surviving spouse was granted the entire intestate estate if the decedent left neither surviving descendants nor surviving parents.
– If either a descendant or a parent survived the decedent, the surviving spouse received the first $50,000 plus one-half of the remaining balance of the estate.
– If one or more of the decedent’s descendants were not the surviving spouse’s descendants, the spouse did not have priority over the first $50,000. Instead it limited the spouses share to one-half of the intestate estate.
CURRENT UPC § 2-102
– Surviving spouse receives the entire intestate estate if the decedent leaves neither surviving de

onmarrying parent) and his kin have no inheritance rights from or through the child.
– Estate of Donnelly – an adopted child may not inherit from her natural grandparents. The state statute stated that an adopted child shall not be construed an heir of his natural parents. The court held that the broad legislative purpose underlying this statute is consistent only with the inference that the statute was intended to remove the adopted child from the bloodline for inheritance purposes. If the adopted child can not take from his natural father, he should not represent him and take from his father (grandfather).
– Stranger to the adoption rule – absent a statute, most courts hold that an adopted child could inherit from the adopting parents, but not from the adopted parent’s kin. The rational was that an adoption should not make an adopted child the heir of a stranger to the adoption.

Step children & foster children – a stepchild or a foster child has no inheritance rights from his stepparent or foster parent.. (except in NJ only if the stepparent has no descendants)
– Exception. Equitable adoption of foster children (adoption by estoppel) – in many jurisdictions, a step child or a foster child can inherit from the stepparent or foster parent in cases involving an unperformed agreement to adopt. However, the rule applies only to those claiming through the stepparent or foster parent. The strongest factual situation for applying this doctrine is where the foster parent expressly contracted to adopt the child but failed to complete the adoption procedures. Intent may also be demonstrated by proof of other acts or statements directly showing that the decedent intended the child to be , or to be treated as, a legally adopted child such as (1) an invalid or attempt to adopt, (2) decedent’s statements of his or her intent to adopt, or (3) decedent’s representation to the claimant or the community at large that the claimant was the decedent’s natural or legally adopted child. These factors must be established by clear & convincing evidence.
Children of parents not married to each other – UPC § 2-114(a) individuals inherit from and through their biological parents regardless of their marital status merely by establishing proof of parentage. UPC § 2-114(c) precludes a biological mother or father from inheriting from a marital or non marital child unless the parent has openly treated the child as his or hers, and has not refused to support the child.
– Non UPC states – the statutes uniformly entitle children to inherit from their mothers, but differences exist concerning the child’s rights to inherit from their fathers because of the greater difficulty of proving paternity.
– Lali v. Lali – the US Supreme Court held that an illegitimate child is the legitimate child of his father so that he and his issue inherit from his father, if a court of competent jurisdiction has, during ht e lifetime of the father, made an order of filiation declaring paternity in a proceeding instituted during pregnancy of the mother or within two years from the birth of the child. (in response to this case states have expanded the ability of non marital children to inherit, either by enacting their own statutes or by adopting the Uniform Parentage Act.
– Uniform Parentage Act – 19 states have adopted this act. This act authorizes actions to be brought to establish the identity of a child’s biological mother or father. In proving paternity, medical tests can be required. If an individual refuses to submit to genetic testing, the court may, on that ground alone determine parentage contrary to the position taken by the individual.

Children conceived by assisted reproduction – UPC § 2-108 – an individual in gestation at a particular time is treated as at that time if the individual lives 120 hours or more after birth.
– Restatement 3d of property § 2.5 comment l takes the position that “to inherit from the decedent , a child produced from genetic material of the decedent by assisted reproduction must be born within a reasonable time after the decedent’s death in circumstances indicating that the decedent would have approved of the child’s right to inherit.
– Uniform Parentage Act – if a spouse dies before the placement of eggs, sperm, or embryo, the deceased spouse is not considered the parent of any resulting children unless the deceased spouse had consented in writing to be the parent of the children so conceived. The donor of the egg or sperm is not the parent of any child conceived by any form of assisted reproduction. If both spouses are alive, a husband must consent in writing to the assisted reproduction in order to be considered the father of any children conceived.

Same sex couples with children – Second parent adoption – Uniform Adoption Act is one of the few legislative attempts to facilitate joint parenting arrangements between unmarried couples (some states have enacted statutes banning adoptions by gay and lesbians). The Act states that for good cause shown, a court may allow an individual who does not qualify ( as a stepparent) but has the consent of the custodial parent of a minor to file a petition under this article. A petition allowed under this subsection must be treated as if the petitioner were a stepparent. The adoption by the stepparent does not affect the adoptee and the adoptee’s parent who is the adoptive stepparent’s spouse or deceased spouse.

Same sex couples with children – Assisted conception – Uniform Parentage Act – if one lesbian partner gives birth to a child as a result of donor insemination, the other partner is not treated as the that child’s parent. The UPA’s provisions on assisted conception speak only of husband and wife.
– Restatement 3d of Property § 2.5 comment l provides that “in general, such a child should be treated as part of the family of the parent or parents who treat the child as their own and raise the child, one or both of whom might not be the child’s genetic parent.